Vivendi Goes Back to Future With SFR Spinoff Plan

Photographer: Balint Porneczi/Bloomberg

The logo for SFR, a mobile-phone unit of Vivendi SA, sits on a giant display screen at one of the company’s stores in Paris, France.

In its unlikely transformation from a regional water utility into Europe’s biggest telecom and media conglomerate, Vivendi has ridden a lot of corporate trends. It may be on the verge of adding another to the list: the spinoff. Vivendi is considering getting rid of its biggest unit, French mobile provider SFR, according to people familiar with the situation. That would let it focus on faster-growing media businesses like Canal Plus, its pay-TV arm, and Universal Music Group (home to the likes of Lady Gaga and Justin Bieber).

If this all sounds familiar to Vivendi-watchers, that’s because it is. A year ago, the company started exploring a break-up, with telecom assets (increasingly out of fashion as smartphone penetration plateaus) on one side, and zippier media properties on the other. After boardroom infighting that led to the ouster of then-Chief Executive Officer Jean-Bernard Levy, the plan was shelved in favor of seeking buyers for assets like GVT, a Brazilian broadband provider, and Activision Blizzard, which publishes blockbuster video games like “Call of Duty.”

Problem is, Vivendi hasn’t managed to find a taker for either at a price it’s willing to accept, so it’s back to square one. Splitting off SFR has obvious appeal. Vivendi could load the slow-growing but reasonably profitable phone group with most of its debt, leaving the media side almost debt-free. And doing so would put an end to a corporate structure that investors have always found a bit odd. But given last year’s misfires, they shouldn’t expect any immediate change.

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